The industries that cried wolf

The introduction of a carbon price in Australia in July 2012 will raise more than $10 billion per year, help influence industrial and household decision making and, inevitably, increase the costs and reduce the profits of some businesses. Such increases in cost and the subsequent change in behaviour are, of course, the objective of introducing a carbon price.

Prime Ministers John Howard, Kevin Rudd and Julia Gillard have all stated their belief that Australia needs to introduce a carbon price to help curb greenhouse gas emissions. Despite this, small sections of Australian business that represent a large percentage of Australia's greenhouse gas emissions continue to express surprise and alarm at the prospect. For example, the managing director of Brickworks, Mr Lindsay Partridge, argues that: The end result will be an exodus of manufacturing industries and investment offshore, jobs will be lost, the cost of housing will increase and there will be no change to carbon emissions. The sooner the current plan is abandoned the better.

Similarly, the Chairman of BlueScope recently stated: The implementation of such a carbon tax in its current form runs a high risk of the steel industry reaching a tipping point where it will no longer be able to maintain the investment required for viable production in Australia. This may mean moving future investment offshore. The broader impact would be devastating for Australian manufacturing across the value chain, and for working families, particularly in regional areas.

These comments by the representatives of some of Australia's largest polluters are likely to leave their audience in little doubt that the introduction of a carbon price will destroy the Australian economy. But should these comments be believed?

This paper places the claims being made about the likely impact of the introduction of a carbon price into a broader context and concludes that such claims are presented in such a way as to exaggerate their significance.

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